One of the reasons I like Position Trading

[taowave]

Quote from cnms2:

It may be correct for your trading approach, but the longer time frame price envelopes are proportionally narrower than the shorter time frame ones.

Draw an envelope that barely includes all the price points on a weekly chart, one on a daily chart, one on a 30 minute chart, and one on a 5 minute chart.

You'll notice that the ratio between the envelopes is less than the ratio between time frames. If you increase your time frame 5 folds (daily to weekly), a daily envelope of i.e. $2 will not become $10, but something closer to $4.5.

This suggests that as you go down towards smaller time frames, proportionally there's higher potential of making money.

This also suggests that market characteristics change between time frames, longer time frames being more suited for counter-trend trading, shorter ones for trend trading.

Another aspect to consider is compounding: longer time frame means less trading opportunities, hence making money slower. On the other hand shorter time frame, less absolute price swings, means higher slippage and commissions impact.

I think you are just explaining that Volatilty increases with the square root of time,and it is NOT an linear relationship..Very good point..

I get the strong impression that very few of the posters have compared sytem returns on dailys versus intraday data.I would suggest it is worth ones time to do so,and not look at net return as the sole determing factor.Take a good look at the perspective recovery factors,and yo may gain some interesting insight..

good luck and good trading to all

 

[Buy1Sell2]

By keeping a position trade going, one can stay with the predominant trend and it is much easier to keep the overall picture at the top of the mind. Then and only then , is it acceptable to day trade, but only taking the obvious signals --generally a chart no less than 60 minutes. One would be patient while waiting for the obvious signal. In the meantime, the positional trade keeps you in the game and less likely to overdaytrade.

 

[Buy1Sell2]

Brokerage firm keeps calling every several days asking if they can make trade reco's. I have no individual broker , so it's a different guy every time. It is painful for them to have so few trades I guess from each trader. I like that quite a lot.

 

[cashmoney69]

Quote from RedManPlus:

I think people draw a false distinction between a "day" and "position" trader.

Let's say that using quantitative analysis...
You determine that a $25.00 stock is $0.50 "undervalued".

So you buy 2000 shares at $25.00

You can wait 2-3 weeks for the stock to revert to "historical norms"...
And make, say, $0.40 in 12 trading days = $800

Or you might get the chance to flip the stock for $0.08 in 30 minutes = $160

But in the 2-3 hypothetical weeks it takes the stock to "revert to norm"...
You can probably do that flip 5-10 times.





Bottom line... a good trader should employ an optimal mix of scalping/position trading.

rm+

Thats why if you were to compare two equally great traders with the same $ amount, one a day trader, and one a position trader, the day trader would probably make more on average.

 

[taowave]

Quote from cashmoney69:

Thats why if you were to compare two equally great traders with the same $ amount, one a day trader, and one a position trader, the day trader would probably make more on average.

perhaps,but dont forget that the day trader will have higher blood pressure,worse vision and a much shorter trading span,not to mention lifespan

 

[foible]

Quote from cashmoney69:

Thats why if you were to compare two equally great traders with the same $ amount, one a day trader, and one a position trader, the day trader would probably make more on average.

Let's give the day trader & position trader $1,000,000. How much would the day trader make? Using the P&L thread as a guide, let's say he makes $3k/day, or $750k/year. This is very good coin, I think, but it looks like many people have a hard time busting out of this plateau. Liquidity serves as a natural limit to many strategies.

If we look at the position trader, he only has to make 75% returns to match the day trader, which should be a reasonable estimate for a position trader at the same calibre as our day trader. But what happens next year? The liquidity limitation that the day trader feels is much farther away for a position trader. He can keep compounding for a long time to come.

Feel free to dispute the numbers. My point is that different people with different skills and bankrolls may find different trading styles are more profitable.

 

[taowave]

Quote from foible:

Let's give the day trader & position trader $1,000,000. How much would the day trader make? Using the P&L thread as a guide, let's say he makes $3k/day, or $750k/year. This is very good coin, I think, but it looks like many people have a hard time busting out of this plateau. Liquidity serves as a natural limit to many strategies.

If we look at the position trader, he only has to make 75% returns to match the day trader, which should be a reasonable estimate for a position trader at the same calibre as our day trader. But what happens next year? The liquidity limitation that the day trader feels is much farther away for a position trader. He can keep compounding for a long time to come.

Feel free to dispute the numbers. My point is that different people with different skills and bankrolls may find different trading styles are more profitable.

Excellent point..And clearly the day trader needs to employ massive leverage,but should have a better Sharpe/recovery factor..

i for one think that the "cerebral" challenge of position trading is a far more holistic way of approaching a profession,not to mention the best position traders in the world make far more than daytraders....

 

[Free Thinker]

Quote from foible:


If we look at the position trader, he only has to make 75% returns to match the day trader, which should be a reasonable estimate for a position trader at the same calibre as our day trader.

sounds so easy. do you even trade?

 

[foible]

Quote from vhehn:

sounds so easy. do you even trade?

I don't think that making $3k/day scalping or daytrading is easy, nor do I think making 75% on a $1mil portfolio is easy, but I think these are reasonable figures to use for skilled pros. Arguing over the numbers just changes the break points but does not affect the overall argument.

 

[snoopcat97]

You can also be a position trader using a pairs trading strategy and not be overly concerned about the direction of the overall market. Makes for a much easier lifestyle and can be very profitable if done correctly.